The luxury industry returns to the United States

From Gucci’s 10,000-square-foot store on the site of a former pencil factory in SoHo to Hermès’ two-story flagship in a New Jersey mega-mall, America is at the heart of luxury.

And that’s a good thing for the industry, because with Shanghai in lockdown and European demand potentially hurt by the war in Ukraine, the US is once again picking up the bling-bling torch.

In 2021, luxury growth was led by the United States, not China. The surge in stock markets and cryptocurrencies boosted wealth, while stimulus checks encouraged many other buyers to dip their toes in high-end waters. And the wealthy didn’t just splurge on Dior bags and Cartier jewelry. They also led art purchases, according to the Global Art Market Report from Art Basel and UBS. This has helped the overall market rise above its pre-pandemic levels.

Structural factors are also contributing to the proliferation of sales of high-end goods. While high-end has long been concentrated in the commercial strongholds of New York, Los Angeles, San Francisco and Chicago, that’s changing. Many Americans moved during the pandemic: New Yorkers moved to Florida and Californians to Arizona and Texas. However, they did not give up their consumer appetite, but instead fueled demand for luxury goods from Scottsdale to Charlotte, Cincinnati and Nashville.

This has sparked a race to acquire prime commercial space, driving up rents in the most favorable locations.

In the past, brands limited their openings to giant flagship stores on Fifth Avenue or Rodeo Drive. Now they occupy major sites in suburban malls and explore satellite stores in local neighborhoods and affluent resort towns. Another incentive to move to the suburbs has been the wave of shoplifting in some inner cities, including Los Angeles and Chicago.

Consequently, the French luxury group Kering SA is reassessing the location of its stores. He opened and revamped Gucci outlets across the United States, most recently debuting in Austin. Gucci generates around 27% of its sales in North America. Other new stores will follow, including in Atlanta and Sacramento. The American Dream mall in New Jersey recently announced that Kering would lease a 10,000 square foot site for Gucci. Kering’s business has not been limited to its biggest brand, but encompasses other houses, including Saint Laurent, which is also extending its presence to American Dream.

LVMH Moet Hennessy Louis Vuitton SE, which generates about 26% of sales in the United States, was also active. Among its new locations is a Louis Vuitton boutique at Hudson Yards in Manhattan, replacing its previous outlet in the now closed Nieman Marcus department store. LVMH is also renovating Tiffany stores after acquiring the jeweler last year. But as the world’s leading luxury goods group, it probably has the opportunity to go further.

Kering and LVMH are not alone. Lanvin Group, whose owners include Chinese investor Fosun, plans to list on the New York Stock Exchange through a blank check company. He will use part of the proceeds to open 200 stores over the next three years – in Asia and the US

All luxury companies that develop in the United States face the risk of the bursting of the American bling-bling bubble.

High-end furniture group RH, formerly Restoration Hardware, warned last week that demand had weakened following the Russian invasion of Ukraine in late February. That hasn’t shown up in U.S. luxury goods sales so far, though store visits fell in March, according to, a company that measures store footfall.

Nevertheless, as the economic outlook has darkened in other parts of the world, the United States is once again emerging as the luxury industry’s best hope.

Luxury goods makers have retreated from Russia, losing revenue there since the invasion of Ukraine, though this probably accounts for less than 5% of global sales. However, there could be a ripple effect in Europe. Expensive handbags and Swiss watches can be seen as stores of value in these trying times, but as uncertainty grows, their appeal could wane. Meanwhile, tourists from the United States and parts of Asia may be more reluctant to visit Europe.

But the biggest concern is China. After fears last year that President Xi Jinping’s Common Prosperity agenda could curb overt displays of wealth, Shanghai, China’s biggest source of luxury sales, has been plunged into a new lockdown. It is no wonder that valuations of luxury goods groups have fallen.

In the long term, China is expected to drive industry growth as the world’s largest consumer population purchases luxury goods. But for now, shoppers in New York’s Meatpacking District, meandering from the Starbucks Reserve Roastery to nearby Hermes and Rolex boutiques, are a useful stand-in.

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This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail sectors. She previously worked at the Financial Times.

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